The city of Harrisburg, which has been all but crippled by a series of bad and possibly fraudulent decisions related to its trash-to-power incinerator, appears tantalizingly close to agreements that would provide a path to solving its financial crisis without declaring bankruptcy.

As tenuous negotiations continue behind the scenes, the debt grows, with the most recent estimate coming in at $370 million.

The deal's framework calls for selling the incinerator to the Lancaster County Solid Waste Management Authority, and entering a 40-year-plus, public-private partnership with Standard Parking, which runs Harrisburg International Airport garages and is the nation’s largest parking facility operator. It also entails convincing each of seemingly dozens of stakeholders to agree to walk away from some of the money they feel they're due.

Other parts of the plan would include money to deal, in a systematic way, with the city’s aging and crumbling infrastructure, provide economic development funds, and set up a trust fund for an underfunded program that provides earned post-retirement benefits for city workers.

The money would not, however, ease the pressure for the city to continue to live within its means.

While those initiatives are still coming together, the city has started dealing with its ongoing structural financial and budget issues that would exist independent of the incinerator debt as they do in Scranton, Reading, Pittsburgh and many others also under the state-structured program for financially distressed municipalities known as Act 47.

Retired Air Force Gen. William Lynch, receiver for the City of Harrisburg,

The plan details were outlined in interviews with Gen. William Lynch, the state-appointed receiver who is charged with finding a path out of the city’s financial mess, his financial adviser Steven Goldfield and Mayor Linda Thompson. They cautioned that nothing is final yet. But all three said they believe they are close to a “hand-shake deal” that would then involve a 60- to 90-day process involving court review and approval.

“Our initiative is to create conditions that allow city government to be successful,” Lynch said. “And we believe this proposed solution is as good as it’s ever going to be. I sometimes shake my head (thinking), ‘How could you possibly consider the alternative to this?’ which is bankruptcy — which we don’t think is good for anybody.”

The Democratic mayoral contest pits Thompson against city Controller Dan Miller, Midtown Scholar Bookstore owner Eric Papenfuse, and long-shot Lewis Butts Jr. Nevin Mindlin, who lost to Thompson in the past election, is running as an independent and will not appear on the ballot until November.

Long before the campaign frenzy began, people had been divided by how to best deal with the city garages that former Mayor Stephen R. Reed used repeatedly as collateral on loans aimed at closing budget gaps. Lynch likened the scenario to paying off a mortgage with a credit card in that “it’s not illegal, but will eventually bite you.”

Harrisburg is living that legacy, staring down, at last count, $157.9 million in principal and interest owed on those loans.

Some people think selling the facilities to a private investor is best, because the money could help pay down the massive debt and off-load the responsibility of expensive capital improvements. Others have argued that the city needs to retain the assets to continue to benefit from the cash they generate.

While Goldfield wouldn’t say how much is being offered by Standard in the deal, he did say the proposed public-private partnership would be structured, so the city and Standard benefit including if revenue is beyond expectations.

A Harrisburg parking garage.

Revenue from the garages would no longer be cannibalized by ping-ponging among the city, Harrisburg Parking Authority and others such as Harrisburg University, as is the case now. Instead, the money would go directly to the city. In addition, the garages are expected to make more money, thanks to a proposed 20-year arrangement renting additional spaces to state agencies.

The plan also encourages people to choose garages over street parking, the city will increase parking ticket fines so low — they start at $14 — that it’s often cheaper to pay one than use a garage.

Much like the state’s 20-year pledge to buy electricity generated by the incinerator sweetened that deal for Lancaster Solid Waste, the state space rental agreement and enforcement changes agreed to by the city make the value of the parking garages increase.

Goldfield said the deal would generate “multiples” of the $250,000 in garage revenue the city now receives annually. The city received $1.25 million three years ago, but about $1 million annually has been diverted to cover bond payments on the garage loans starting in 2010.

Since then, Thompson has been criticized for the city's inability to complete timely financial audits, which are among the most basic of accounting procedures. The mayor, Lynch, Goldfield and Fred Reddig, another of Lynch's advisers, said the final overdue 2011 audit should be finished by mid-May.

Harrisburg Mayor Linda Thompson

They also said the city’s financial department has been rebuilt and will be able to handle audits and other basic financial operations on a timely basis going forward.

To deal with the structural debt issues, Thompson said she’s cut the city’s workforce by 20 percent during her term. Expenses are down an additional 10 percent.

The city also started analyzing its vehicle fleet recently, and has started selling off some public works equipment in preparation to privatize waste collection starting next year.

Those kinds of efforts, Lynch and Goldfield said, would need to continue, if the city wants to secure its future, because local officials must demonstrate sustained financial reform, if they are going to rehabilitate Harrisburg’s credit rating.

But, as Lynch has repeatedly said, the “devil is in the details” and more issues need to be resolved.

The city says it needs $4 million in annual union concessions. Goldfield said environmental regulators will need to compromise on potential fines based on past practices. Surrounding towns would need to agree to regionalizing some services and infrastructure, he added.

And although no one will say how much Standard is expected to pay for the garage lease, or whether Lancaster’s incinerator offer is close to the $120 million last reported months ago, everyone acknowledges it will be less than the outstanding and growing incinerator debt.

“People are going to have to walk away,” Goldfield said.

And that gets to the “people problem,” as Lynch describes the process of convincing each stakeholder to agree to compromise on not making as much as they expected.

"I’m not the city’s advocate in this. I’m an advocate for a solution. And adversarial discussions (are) really limiting," Lynch said. "Even if it's a perceived hurt, it's real. Even if it seems to some of us irrational, it’s there. And if we don’t take that into account, then I think we’re missing an important point."

As reasonable as that sounds, the process has proved “manic”, Lynch said.

The decision not to speak publicly about any of the significant details in order not to risk setbacks has caused its own problems. Many people living and working in and around Harrisburg have been frustrated — infuriated, sometimes — by the lack of public action. The upcoming election has only amplified those feelings.

And the feeling that the people who created the incinerator crisis need to be brought to justice continues to grow.

Lynch has said he’s satisfied — for now — with entrusting that to Dauphin County District Attorney Ed Marsico, while he and his team focus on what Goldfield described as “an impossible math problem” on the brink of being solved.

If it works, that solution could be a "national model" for other struggling municipalities, Lynch said.

If it doesn't, that would almost assuredly mean bankruptcy court and its own mix of high costs and lengthy delays.